Hi, I’m Eve. Our US readers often hear about the egregious price gouging by big pharmaceutical companies, especially when it comes to medicines that are essential to treat dangerous conditions. US patients are regularly told, with concrete examples, how much cheaper cancer drugs and insulin are in other countries.
While it is generally true that countries with a system of centralized purchasing and price negotiations for pharmaceuticals get better prices than the United States, the following article explains that there is still a considerable gap between the two. Meanwhile, pharmaceutical companies justify their stance by pretending that they have volume discounts, as if buyers who buy in bulk get a favorable discount. That might make sense if the variable costs of the pharmaceutical business were high. But some people who pretend that manufacturing costs are insignificant and that inquiries about pricing are unpleasant claim high research and development costs. Well, they are not variable costs, so does that justify cheating small countries? But anyone close to corporate accounting knows how much freedom there is in the classification of overhead costs, so complaints about the allocation of high research and development costs need to be viewed with suspicion.
One of the indignities, about which I must confess my own ignorance, is the insistence of pharmaceutical companies to keep secret the prices they negotiate with various countries. Huh? Why would anyone comply? Or to put it another way, what if a big group like the whole EU member states came together and said we are no longer cooperating, this secrecy regime is unjust, it’s a competitive abuse? Big Pharma might think they could get a grip not just on Germany but on the whole EU.
by Juliet Ferguson, Eurydice Bellusiand Maxence Peigner. Originally Open Democracy
Non-disclosure agreements are allowing pharmaceutical companies to make billions of dollars from secret deals on life-saving medicines, an investigation by Investigate Europe and partners has found.
European governments don’t know how much other governments pay for medicines, which means they could find themselves paying exorbitant amounts — or, in many cases, unable to pay at all.
Monika Luty, a 27-year-old from Poland, is one of hundreds of thousands of patients who have suffered as a result of these non-disclosure agreements.
Ruti has cystic fibrosis, a genetic disease that causes abnormally thick mucus to clog the lungs and digestive system. It’s a life-threatening condition with no cure. But there are ways to manage it: a drug called Kaftrio appears to be a game changer in treating the disease.
But not for Luthi.
In 2020, weighing just 37kg and with only 20% of her lung capacity, she was in a critical condition and posted a video online begging Vertex Pharmaceuticals, the manufacturer of Kaftrio, to give her the drug. Kaftrio was approved in the EU but not for sale in Poland.
Her pleas to the company were in vain, but thanks to crowdfunding, she was able to buy Kaftrio in Germany, and seeing its effectiveness first-hand, she then changed her life, moved across the border, got a job in Frankfurt, and was able to get her prescriptions filled for free.
Once in Germany, getting Kaftrio was “very easy,” she recalled. “All you needed was insurance, a job and living there.” In 2022, the drug became available in Poland, allowing Luti to return home.
Modern medicine has given hope to patients with diagnoses that may have previously been a death sentence. Today, we can treat once-untreatable illnesses, extend life spans, and more easily manage chronic conditions.
However, many of these innovative medicines are expensive, putting enormous pressure on European healthcare systems.
The proportion of the health budget devoted to medical expenses in 2018 ranged from 8% in Norway to 24% in the Czech Republic, a study by the UK’s National Institute for Health Research found. IQVIA Human Data Science Instituteis a healthcare-focused think tank based in New Jersey. In the UK, the National Institute for Clinical Excellence, a public body that provides guidance on improving health and social care, makes recommendations on medicines that should be procured by the NHS based on clinical effectiveness and cost-effectiveness. As a result, around 9% of the UK’s overall annual budget is spent on medicines.
An Investigate Europe investigation found evidence that in at least one category of very expensive and critical medicines, powerful and wealthy countries are able to get better deals compared to those with smaller populations and weaker negotiating power.
We looked at Vertex Pharmaceuticals’ revenues by country, as reported in the company’s financial statements, and divided them by the number of patients extracted from the patient registry: a treatment that costs about €71,000 per patient per year in France would cost €175,000 per patient per year in Lithuania, even if it were only finally available after a delay of several years.
“The prices of our medicines are based on their innovation and the value they bring to the CF patient community, caregivers and the health care system,” a Vertex spokesperson said. “The reimbursement prices quoted in your inquiry are inaccurate.” The company declined to comment on individual countries or identify inaccuracies. The company added that over the past decade, more than 70 percent of its operating budget has been spent on research and development.
High-income countries have a higher willingness and ability to pay, offer more attractive markets and have greater bargaining power, while low-income countries have greater budget constraints and therefore less bargaining power.
The result is unequal access to medicines across Europe, leaving some countries without access to life-saving medicines, while pharmaceutical companies report making huge profits from medicines that are often developed with public funding in their early stages. Forbes magazine makes healthcare list It ranks second out of the top five sectors to invest in.
Statista Global pharmaceutical industry revenues are projected to reach $1.48 trillion in 2022. University of East Anglia Survey 2019 The combined revenues of Amazon, Apple and Google were shown to account for just 56% of pharmaceutical revenues.
U.S.-based Vertex Pharmaceuticals, which has a monopoly on cystic fibrosis treatments, can charge the government more than 200,000 euros per patient per year for Captorio. According to British researchersThis is not unusual: new medicines that can treat only 2-3% of patients – often innovative products addressing previously unmet medical needs – are expected to account for half of pharmaceutical spending in high-income countries by 2026. Discovered by IQVIA. They have not yet predicted what this means for low-income countries.
In the Netherlands, the Pharmaceutical Accountability Foundation is suing American pharmaceutical companies. AbbVie files lawsuitThe company claims it overcharged the Dutch healthcare system by 1.2 billion euros for its arthritis drug Humira. The company denies the allegations, saying it “acts in accordance with all applicable laws and regulations” and is “committed to the needs of patients and the communities we serve.”
In the EU, the European Medicines Agency is responsible for deciding whether medicines are safe for sale on the EU market. Each member state is then free to decide whether its own health system will purchase approved medicines, and it also negotiates the price of medicines. The final price a country pays for a medicine, after deducting discounts and rebates, is kept strictly secret.
This hybrid system allows the pharmaceutical industry to negotiate with each country individually, explained Dutch lawyer and public health advocate Ellen ‘t Goen. “The fact that everything is done in secrecy gives the pharmaceutical industry a lot of power to play the divide and rule game,” she told Investigate Europe.
“Price secrecy is considered a core value of the industry,” says Wim van Hulten, a Dutch oncologist who has spent years researching the true cost of cancer treatment across Europe.
Lack of transparency means “less buying power” for countries, says Sabine Vogler of the Austrian National Institute for Public Health. They go into negotiations in the dark, facing pharmaceutical company negotiators who know the real prices in every country. “If you have the whole picture, you can have more negotiating power,” Vogler says.
A spokesman for the European Federation of Pharmaceutical Industries and Associations (EFPIA), the pharmaceutical industry trade and lobby group, told Investigate Europe: “There is broad agreement that prices should reflect a country’s ability to pay for medicines.”
“EFPIA and its member states are proposing a system for Europe where countries that can afford to pay less for medicines will pay less.”
“An agreement of this kind requires solidarity among member states to anchor these ‘fair principles’ and to prevent them from being undermined, for example, by international benchmark prices or supply diversion, where medicines sold cheaper in one country are quickly exported to countries with higher prices.”
“The industry supports efforts to provide patients with the most timely access to medicines,” he added, adding that in some cases, this may require cross-border collaboration.
As the COVID-19 pandemic turned the world upside down, EU countries were forced to band together to quickly get people vaccinated. For the first time, the European Commission negotiated and purchased medicines on behalf of all EU member states, as well as European Economic Area countries such as Iceland and Liechtenstein.
According to the EU Court of Auditors“By November 2021, the Commission had concluded contracts to purchase up to 4.6 billion doses of vaccines on behalf of Member States.”
The joint procurement of a COVID-19 vaccine proved that this could work, but the price was still secret. “It was a real missed opportunity,” Vogler said. “If the EU hadn’t used its collective power to agree to confidentiality clauses, things could have been very different.”
A European Commission spokesman told Investigate Europe: “The Commission fully supports all exchanges and cooperation between Member States that can improve the availability and affordability of medicines.”
They added that joint negotiations require some similarity between each state’s pharmaceutical system and pricing and reimbursement processes, but said “greater transparency around pricing information” could improve these processes.
Giorgos Pambolides, a former Cypriot health minister, believes European countries are wrong to refuse to cooperate in drug negotiations, describing confidentiality clauses as “a way for the pharmaceutical industry to exploit the advantageous position it has over its client states.”
“The EU is giving up its only advantage, its size, without the slightest consideration,” Pambolides added.
This is pure market logic: even the biggest discounts that Europe’s strongest countries could get on their own are nothing compared to the discounts that a single market and joint negotiations could provide. And it is people like Luti, with her long-term health problems, who will pay the ultimate price.
